tv Prime Interest RT July 9, 2013 1:29pm-2:01pm EDT
it's in d.c. here's a story we're telling today the world is turning or is it looks like we have the slightest inkling of a crack down on wall street but is it too little too late the press have corridor not told though it may be continues against john kors i and x goldman i gary gensler is being painted as a tough new sheriff even though he abdicated oversight of the entire futures industry one m.f. global ago and its age of whistleblowers today actually yesterday snowden and then today bank of america thanks to two lawsuits we learned how the too big to fail giant systematically built home over promise and loan modifications who then they proceeded to take out of those homes and you might have heard of the volcker rule that says banks cannot gamble with customer money lloyd blankfein said his goldman sachs stopped doing this but guess what he did it we just learned that the firm found a loophole to keep doing it anyway over a billion dollars worth we'll learn how this is possible and how it might add we talked to part naylor a public citizen finally we have eliot spitzer who resigned in disgrace in two
thousand and eight just as a flight anshul panic was heating up well he's back and he's looking to oversee new york's one hundred forty billion dollars city pension plan he won't be able to bring charges of things school so. find out what's in your prime interest. you might remember that elementary school lesson how a bill becomes a law the law or statute as an act of by congress it's usually somewhat vague by design but what. happens after it's passed it's up to government regulators to make
specific rules or regulations to implement the law this rule making process goes on usually with the help of the very entities that are being regulated and that's what j.p. morgan attends all those meetings with this you have to see and it's to see have to see the commodity futures trading commission that has been charged with writing the dodd frank rules that deal with derivatives this is a seven hundred trillion dollar industry well dodd frank just celebrated its three year anniversary and many of its statutes have not been implemented and made into rules this friday an exemption to a key statute is expiring the big banks are pressuring pressing the head of the c.r.t.c. gary gensler to extend this exemption that has trillion dollar implications here to explain all of this is bart naylor a financial policy advocate a public citizen thank you for joining me thank you for having me let's jump into this july twelfth expert expiration to tell us what. what it's about is gary gensler attempt to close the major gap in dodd frank which basically lets the
american banks operate with out reform regulation provided that the e-mail account on the e-mails ends in dot u.k. or dot caymans that is to say they book their transactions in london and so he is playing a high stakes game with his fellow commissioners there's five to get i three to vote on the guidance. part of this complication of how a bill becomes law that will say no you have to obey the full suite of american laws even if you operate in london whereas we need a five person commission and it all boils down to one commissioner his name is mark wage and he's but there are democrats he is undecided and he is not sure what he's going to do and gary gensler is so far kind of been losing this battle and he's going to be removed or he's actually going to be out as a commissioner is his replacement going to do any better it is hard to imagine.
body bringing more zeal and experience and knowledge of where all the bad stuff happens then gary gensler remember many of us were very nervous that the president would name a goldman sachs trader to be you know the fox guarding the hen house and he's happily surprisingly turned out to be excellent better than if you just had a boy scout who didn't really know his way or her way around goldman sachs we don't know who the replacement is hard to believe we're going to get somebody better than gensler ok with gensler kind of abdicated his role over the futures industry when he let them if global fail and fall into a supposed you know liquidation unfortunately he waited a few days to recuse himself i don't think he handled that particularly well but i'm sure that he would agree that things should have been done better i don't know the details of his relationship with corps i what he did or did not say. none in position to cast calumny on him for that sure let's talk about glass steagall this was a something that was instituted in the one nine hundred thirty s.
to separate banking from investments and then it stood for decades and decades and in the late ninety's we had a bill come along that changed that what's the background on that well eighty years ago this month or last month in fact. in the wake of j.p. morgan for example shopping bad loans down their investor clients. throats carter glass of virginia senator conceive that there should not be investment i.e. the gambling part of banking in the same shop as the patient loan making part so he wrote glass steagall which also included f.d.i.c insurance that served us well until a steady drip of exceptions were extracted out of the agencies through the eighty's and ninety's until one thousand nine hundred nine when there was a full out rip. travelers or citi bank travelers group and became citi group and me or nine or so years later blew up the world well we have
a clip of a couple of people actually congress people who were talking about this way back in one thousand and two we've all. so as we enter mr president the twenty first century has nine hundred will help in my view to continue our nation's financial services industries leadership in the global marketplace and that's a critical issue it will make our financial institutions much more competitive in a world of globalized financial transactions this bill is vital for the future of our country if we didn't pass this bill we could find london or frankfurt or years down the road shanghai becoming the financial capital of the world. and the first guy we saw was mr dodd who put the dog in dodd frank he got that a little bit wrong then he got that wrong jack reed would say today that he he regrets those words and mr schumer unfortunately because of this they have made
singapore and london the financial capital of the world because with investment banks no no national borders and we talk about competitiveness what is it competitive that goldman sachs for example with its thirty two thousand employees has five thousand in london they are not american foreign exchange students they are london citizens paying the london payroll taxes this competitiveness is a feel good word that actually means exporting american jobs but it could also mean regulatory arbitrage not only between different countries but even in the states that we have them yes regulatory arbitrage is the same thing as when a teenager wants the car keys and mom won't say yes so they go to dad so if you don't like the rule in the united states go to where you like the rule and pretend that you're operating there i say pretend because this is all done on the internet where the person is actually sitting doesn't matter for example when a g. had all of its or the money that is supposedly reported by apple in in
ireland for tax purposes is physically in a new york vault it is only for legal purposes on the internet booked as ireland so let's talk about these two. and what is your opinion of the what what apple is doing and some of these companies who are holding a lot of cash offshore and they're doing it for a specific reason is it going to be repatriated perhaps through an exemption or something that's passed into law this year or next while tax reform is on the on the on the table in congress right now and again you say offshore the offshore part is just on the internet it is physically right here in the united states yes we need to repair this. the american tax code is woefully in need of repair unfortunately this same congress and the same political contribution dysfunction that has caused us to have this congress needs to be fixed by that congress and why would they do that since the same bad system got them there why
would they fix this system which inevitably introduce replacements to them but i have to ask the question can the system be fixed as it is it can be fixed because while we do have a one dollar one vote system that applies we simultaneously have a one person one vote and come november people need to understand. how their member of congress voted on that and they i believe citizens you know citizenship is a daily task it's not just you know three days before the november election and i believe they need to we all need to understand financial issues more our jobs depend on it well that's our job here a prime interest let's move on to the as you see jobs act that's another big piece of legislation rulemaking has been delayed in the and there are certain provisions that allow advertising to the general public now for private offerings which don't have fully audited financial statements are only two years what's what's your opinion of this well first of all the jobs act is all leap and no logic says that
somehow if we make it easier for firms to raise capital from investors that will create jobs i mean the problem is that we have so many people out employed under. a lot of with seven hundred billion dollars of mortgage debt that they're not buying products that entrepreneurs might want so that's the real problem that let's let firms raise money easier now to get a bank loan you have to promise a lot of first born son but somehow to do the more risky thing goes straight to the public we don't have to tell them anything i mean that's that's that's absurd when eighty years ago again f.d.r. signed the securities law he said to the principle of kava got em tore let us add let the seller be aware so one thing that the misnamed jobs act says is that we don't really need to determine the sophistication or the wealth of the investor to which we are about to sell this well that doesn't seem particularly safe but they do have to the broker is responsible now first certifying that a person is financially sophisticated they might have to get
a letter from the person's attorney or their tax count and there does seem to be a little bit of oversight here that's been pushed in that direction but that accreditation apparently is whatever the broker determines it should be there are no unfortunately even under the new chair of mary jo white we don't have clear rules and to me if somebody isn't sophisticated enough to know how to find a brokerage firm they really shouldn't be allowed to respond to an internet e-mail advertisement for a quick buck investment opportunity as interesting so what you're saying is the very fact that a person does not have a broker means or probably unsophisticated to because that would be a first test it seems to me well we're out of time here for the break but we're going to be back with bert naylor in just a bit so coming up our very own larry and boring will be full blown when the former new york attorney general eliot spitzer you won't want to miss what she dug up on him then i will do breaking the said many right below the founding because of all
right i'm back with more from bart naylor we were just talking about eliot spitzer i'd like to correct myself is one hundred forty billion dollar pension fund that he wants to oversee what are his handicap his odds here of getting this position what is he well i know the voters as well as anybody right in new york as well as anybody raised in idaho would know them so i don't know if he's going to win this position but the new york controller is already one of the more active shareholder
proponents bringing actually using their f.c.c. parag it's to bring shareholder resolutions they for example brought the resolution that challenge whether or not jamie dimon can be both c.e.o. and oversee himself as chair for example and did very well in the vote no campaign on ellen food or who was one of the risk committee members of j.p. morgan and brought the credential of being head of the natural history museum. in new york city but all sharp teeth are more than welcome in the field of shareholder activism just for example j.p. morgan allegedly spent five million dollars and trying to convince shareholders to vote with it or vote with jamie dimon and let him both be a manager and chair overseeing himself so i think this is an important point because we have hedge fund managers like carl i can who is an activist investor and he uses power to get on the boards can eliot spitzer really affect any change
though in this position or is he going to use his rolodex to the new york attorney general office or the governor himself to be able to effect some change well any any device that is available there are special laws in new york that that can apply i think we have seen in. in the non-prosecution of the greatest financial crime in . world history really not just a lack of zeal but a lack of inventiveness people keep saying well we can't prove c enter a we can't do this well ok but you can do many things and put your thinking cap on you can do it kathy let's talk of let's talk about swaps regulation right now and we'll have we only have about a minute left what is the future of this seven hundred trillion dollar industry that the c.e.o. of to see is trying to rein in or regulate well ideally this seven hundred trillion will become a seventy trillion dollar industry apparently we've built the railroads in the pharmacy industry without the swaps industry this thing that sold us risk management is not only counterproductive it is a drain thomas philippon n.y.u.
professor has proven that the cost of intermediation that is to the cost of banking has risen this so-called innovations have introduced inefficiencies so ideally we'll just lop a zero off that seven hundred trillion dollars sounds like a good idea and it's a federal reserve itself that really prints all this money and i would say probably contributes to this problem in a big way we're out of time here but it was a great pleasure talking with a start miller thank you thank you. i i. i. they wanted eliot spitzer is campaigning for new york city comptroller a former new york governor resigned after a prostitution scandal and two thousand and eight he told the times over the weekend i am hopeful they'll be forgiveness i am asking for it but has the big
apple exterminated this worm for good in light of his recent endeavors let's revisit the profile of eliot spitzer he was raised an affluent area of new york city and walked the halls us. some of the most prestigious universities he received as an undergrad from princeton university and a law degree from harvard to prevailing in academia he went on to conquer white collar crime in the manhattan district attorney's office he became the chief of the labor racketeering unit and led the investigation that brought down the gambino mafia on an organized crime scene sting he soon took an interest in politics and successfully ran for state attorney general this is where he dubbed himself the sheriff of wall street have you played an untraditional role and prosecuted a federal cases against the most powerful firms on wall street using the more inactive one nine hundred twenty one spitzer used
a greater than usual powers to step in where the federal government normally has jurisdiction he joined the f.c.c. to secure more than a billion dollars in fines during a late trading investigation and the global settlement for inflating stock prices he levy the penalties from j.p. morgan chase goldman sachs deutsche bank just to name a few he also went after dick grasso the then chairman of new york stock exchange for receiving excessive compensation at the time it was listed as a not for profit exchange however this attempt was fruitless so won the case in court in addition to whipping the financial services sector in line attorney general spitzer pursued cases in other industries including bringing down several prostitution rings after laying down the law as a.g. he became the fifty fourth governor of new york but only for half a term as his terminal issues conquered him reversing the investigations on
spitzer's he resigned after the f.b.i. caught him with his pants down at the mayflower hotel his stand that was revealed just a few blocks from here and what's been called at least fateful city and america he was referred to as. client nine and booked his room under george fox his friend and campaign donor and a news conference he stated that he has insisted that people take responsibility for their conduct and he will ask no less of himself the investigation and the shaded from suspicious money transfers from the governor's account originally thought to be bribery this led to the discovery of the emperor's club a prostitution ring spitzer spent about eighty thousand dollars for prostitutes over several years including while he was enforcing prostitution laws as attorney general when asked about this apocryphally and his new bed for comptroller he stated it's a fair argument we should move on and let the people decide because no taxpayer
funds were found to be misused in the case but sir why are julie law walked away with only a bruised reputation as no federal charges were brought against him five years later but there is ready to run for new york comptroller this office would put spitzer in control of the city of large pool of pension funds and the city's spending but to make the story just a bit more interesting he would be running against kristin davis the x. madam who claims to have supplied the prostitutes to spitzer according to her website she was convinced of promoting are convicted of promoting prostitution and served four months in jail. an order to have actually entered the race yes to collect three thousand seven hundred fifty petitions by this thursday davis says this is going to be the funniest campaign ever not only will spencer have to overcome this self-proclaimed feminists he's going to have a hard time finding backing from the big players in the city he interrogated and his previous office good luck mr spitzer.
joining me know is breaking the sub producer manuel right below many thanks for joining me i do man i like yourself this i care so much and get to chill here like you are i'm interested i like it i like the chairs. all right well this is the first story with the administrative office of the u.s. courts recently released its two thousand and twelve wiretap report inside the details the average amount spent on each federal wiretap wiretap a whopping fifty seven thousand dollars that's more than the median family income in two thousand and eleven and when congress is looking at reducing the nation's deficit are these expensive wiretaps even on the table where they know this is
ridiculous and we're talking about seven thousand dollars you know per wiretap fifty seven fifty that's that's ridiculous are you kidding me like you know that should say a lot about what the medium household income is in the united states anyway that's a whole other side of the story but i mean think about how much money this government is spending you know across the board on military and defense and surveillance surveillance is only one aspect it was of this much larger kind of bloated budget you know what is the black budget where does it come from i mean the way we get to these black budgets in the first place is the federal reserve prints a lot of money lowers interest rates what's your position on the federal reserve itself. the federal reserve well first of all i think we should end the fed i don't really understand where we where we need to be talking about that but back to the issue of this black budget and where it all comes from but we should you know make note that over the last few years since two thousand and nine when we broke in this country fifty billion dollars for a black budget it's only been steadily increasing that's on on secret programs
alone on the stuff that we have no idea where where the money's going literally we have no idea where this money is being funneled to that alone is more than most other countries spend on defense altogether so i mean that should tell you a lot and one of the other and the other reason i was mentioning the federal reserve is because it in abel's this process of one point seven trillion dollars you know paid who who's going to get this money who's going to buy these bonds if the federal reserve does it anyway we're going to move on to the next story i think we're in a little bit too much agreement here the c.e.o. of an aluminum company recently announced that he is giving away his three million dollars bonus to his employees the act of generosity might help put the c.e.o. in a positive spotlight after he's been battling allegations of bribery and extortion is this the free market solution to income inequality of the skies here oh no i mean i don't really in dollars this is this is a lot of money for anybody that the truth is that this there's a lot of allegations around around this guy and why is doing is he really distracting from from the bigger issues at play but i think it's actually really
good model in terms of kind of. awarding a rewarding your whatever employee are you giving them the imperative but should it be mandatory in other words the c.e.o. bonuses of companies like exxon and and whoever they get a lot of their money from the government through corporatists deals should they be forced to pay part of that to their employees as well this should certainly not be mandatory but if we're going to live in this free market system where we want to what we market will hear me if you want to live this place where you say that you know it's you know privatization is better and you have you know more charity would do better than what the government could ever do. it may not be mandatory but you can at least lead by example and i think that in this situation it's one of those perfect examples of leading by example but i think so too and let's get into the financial sector we have people like jamie diamond and lloyd blankfein goldman sachs who reaped multimillion dollar bonuses when they were the ones who were receiving all this money in two thousand and eight. it really doesn't seem like
there was any pushback on that or at least not enough do you think that the government itself should be in a position of dictating at least the financial services c.e.o. pay listen that it's only a matter of time for these guys into being chairman of the fed secretary of something else it's one big revolving door that you can look at it right now timothy geithner is one of the highest paid ever and you can one hundred thousand on par with bill clinton how he's not only player how in the world is that ok and you can look at this across the board about the obama administration if you look at this susan right susan rice is the highest paid cabinet member of all the ministries mean the highest paid but she definitely is the wealthiest she. did there's so much going on right there she has what's going on here that i can tell you is there isn't something else. we're talking about revolving door and like i said today another good example it's only a matter of time before we see a dime in and all these other guys joining in the ranks of some guy certainly a man who this is been great thank you much so much for joining me if you want to
weigh in in today's show be fertile sure to like us on facebook at facebook dot com slash prime interest and you can follow a man himself on twitter at money well underscore i hope i got that right you can follow me out in many thank you so much for joining me i. i . it was a sordid day here at prime interest well we are right next to the mayflower hotel mr spitzer is watergate and gensler is wall street's new cop such a fall stench never emanated from denmark just as hamlet and speaking of shakespeare the new york times like in mr cloyd zines affair it's a bed of henry the second world no one read me of this troublesome priest
a priest would be customer money protection record on and as for a mysterious dot in frank it turns out that you love to hear the sins that they've loved well as earthly said to be opinions we're out of here thanks for watching and make sure to come back tomorrow from everyone here prime interest have a great night.
i would rather i asked questions to people in positions of power instead of speaking on their behalf and that's why you can find my go larry king now right here on r.t. question more. wealthy british science. is not on the. market why not come to. find out what's really happening to the global economy with mike's concert run no holds barred look at the global financial headlines tune
into kinds a report on r t. n r t at ten pm the international stalemate over edward snowden moves a step closer to being results venezuela confirms that now it's received a formal request for political asylum from the whistleblower on the run caracas early a signal to its willingness to offer him refuge from u.s. prosecution. russia says it has evidence that syrian rebel fighters know government forces used chemical weapons in an attack on aleppo back in march that's according to moscow's envoy to the united nations. the muslim brotherhood in egypt urges the nation to rise up against the military following the ousting of the president on monday's deadly clashes in cairo this is the interim leader reveals a transition timetable now for a new government. and indeed a muslim brotherhood rally is now in full swing just outside of cairo with thousands of.